If you’re a first-time homebuyer, buying a home is likely the largest purchase you’ve ever made. Homebuying can be overwhelming and stressful, and that’s when you’re trying to purchase property in normal times. Opting to buy a home during the current climate, amid the coronavirus pandemic, can add even more uncertainty and stress.
Surprisingly, the real estate market hasn’t slowed down much, despite quarantines and social distancing. In fact, home prices are going up, thanks to supply and demand. According to the Federal Reserve, the average sales price of a home in the third quarter of 2020 was $324,900. At the same time last year, the average sales price was $318,400. Low mortgage rates have attracted potential buyers to the market, increasing demand — and that trend may continue in 2021, as coronavirus cases continue.
Homebuyers hoping to take advantage of low mortgage rates can always visit Credible to compare rates and mortgage lenders instantly (plus, it's free!).
6 tips for buying a home during COVID-19
One way to help reduce stress while house hunting is to understand the home buying process. The pandemic may have altered some aspects of the home buying process, and we’ll help you navigate some potential changes you may encounter throughout the purchasing journey in 2021. Here are six tips for first-time homebuyers (and beyond):
- Determine how much house you can afford
- Compare rates and mortgage lenders and get pre-approved
- Be flexible when shopping for the perfect home
- Don’t skimp on the inspection
- Keep up with deadlines
- Wait until you close on your home to make expensive purchases
1. Determine how much house you can afford
Your first step should be to determine how much you can or want to spend on your home. This initial number will likely be an estimate. Your lender will let you know the size of the mortgage for which you qualify. Look at your current mortgage or rent payment and consider how a larger monthly mortgage payment could affect your budget.
As you’re considering your budget, don’t forget to think about property insurance, private mortgage insurance, utilities, maintenance, and property tax. Additionally, you may need to make additional purchases like yard equipment if you don’t currently have any. As you’re considering your budget, you should use an online mortgage calculator to determine potential monthly mortgage payments.
Before making any major financial decisions, crunch the numbers using Credible. Just enter some simple information into their free online tools to compare rates and lenders and see how much home you can afford in today's housing market.
Now is also the time to figure how much money can put towards a down payment.
2. Compare rates and mortgage lenders and get pre-approved
When you’re ready to begin looking at homes and evaluating home prices, consider multiple mortgage lenders. Use a site like Credible to compare lenders and mortgage rates. Comparing rates from various lenders lets you make the most educated choice and find the best deal.
Once you choose a lender, ask for a preapproval letter. This letter will help set your home offers ahead of those who are bidding without preapproval. Your lender may approve you for more money than you anticipated, and it may be tempting to go over your original budget. Know your limit beforehand to avoid buying a home you can’t afford.
3. Be flexible when shopping for the perfect home
Before you tour homes, sit down, and make a list of things you need in your new home and things that would be nice to have. In many areas of the country, the housing market is extremely competitive. So, prioritize things that you can’t change (or can’t easily change) like location and number of bedrooms.
Thanks to the coronavirus pandemic, in-person tours are more challenging to come by. Fortunately, buyers can tour homes virtually. Between video tours, video calls, and photos, virtual touring is nearly as good as being on-site. If possible, you could even drive through the neighborhood to get a feel for the area.
Once you’ve found the house you want to purchase, your real estate agent can submit an offer to the seller. Your form will include the price you’re offering on the property, the proposed closing date, and any contingencies that must occur before the deal is finalized.
If you're looking to get a mortgage and want to complete the process online, then Credible can help. With Credible, you can submit documents and get in touch with an experienced loan officer without leaving the comfort of your home.
4. Don’t skimp on the inspection
Before your lender approves your loan, they’ll ask for a home inspection. During the inspection, you’ll discover any faults in the property. The inspector will look for critical issues, including water damage, structural issues, damaged electrical systems, plumbing concerns, roofing concerns, and pest issues. You’ll receive a document detailing anything that is broken or hazardous. The inspector focuses on issues that are safety concerns, not cosmetic.
If possible, attend the inspection so you can ask questions. Once the inspection is complete, you can add conditions to your offer. For example, you could ask the seller to repair a leaky roof or replace a broken water heater.
5. Keep up with deadlines
Deadlines are essential when purchasing a home. Deadlines help move the sales process along. Turning in all your documents is especially important when it comes to applying for a mortgage. Any delay on your end could make the sales process take longer or worse.
Obtaining a preapproval letter from your lender is a significant first step towards staying on a deadline. While you will likely have to submit additional paperwork, you can save time if the lender already has a lot of your information on file.
Before applying, visit an online mortgage broker like Credible to get personalized rates and preapproval letters without affecting their credit score.
6. Wait until you close on your home to make expensive purchases
Buying a home is exciting. It’s fun to pick out new furniture and paint. You may want to charge a new patio set or a new bedroom set but don’t. Avoid making major purchases, and don’t charge anything on your credit cards after you’ve submitted your loan application. Any financial changes could delay or cancel your loan approval. While a preapproval does indicate that a lender is willing to let you borrow money for your mortgage, they can change their mind. Wait until you have the keys to your new home in hand before going on a shopping spree.
Again, if you're looking to make any big home purchase and want to take advantage of today's historic low mortgage rates (rates may not remain low in 2021, so act fast), then head to Credible. Credible can help you find a low interest rate and simplify your home buying process. Get started today.